Journal Register approved to sell assets in bankruptcy court

The Macomb Daily, owned by the Yardley, Pa.-based Journal Register Co., is moving from this building in Mt. Clemens to an office in Clinton Township. The company is in bankruptcy for the second time since 2009.

After bankruptcy in 2009

A Chapter 11 2009 bankruptcy left Journal Register Co. with about $225 million in debt (leases, defined benefit pensions and other liabilities), which had been reduced to about $160 million when new owner Alden Global Capital voluntarily put the company into Chapter 11 again last September. The company didn't disclose dollar figures but did say in September that:
• Digital revenue grew 235 percent from 2009 to 2011.
• Digital investment has increased by 151 percent since 2009.
• Debt has been cut 28 percent since 2009.
• Overall costs have been cut 10 percent since 2009.
• Print advertising revenue, which is more than half of all company revenue, has fallen 19 percent since 2009. That's two percentage points worse than the industry average.
• Pension liabilities have grown 52 percent since 2009.

Journal Register Co., a newspaper publisher in bankruptcy for a second time, won court approval to sell its assets to an affiliate of its current owner in exchange for $114 million in secured debt and about $6 million in cash.

U.S. Bankruptcy Judge Stuart Bernstein in New York today overruled a union, part of the Communications Workers of America, that had objected the deal with the buyer, 21st CMH Acquisition Corp.

"In light of fact that the transaction will not close until after the termination of the collective bargaining agreements, the court overrules the unions' objection," Bernstein said in his written ruling. The union contract expires on March 31.

The sale moves Journal Register a step closer to winding down and resolving the Chapter 11 case it started in September. The company delivers local news and other information to about 1,000 communities in 10 states, including Michigan, and reaches 21 million people a month, according to its website.

The papers that constitute the backbone of the Journal Register chain in Michigan are the daily Oakland Press in Pontiac, Macomb Daily in Mt. Clemens, Royal Oak Tribune and Mt. Pleasant Morning Sun, along with more than 80 nondaily publications.

Auction canceled

Journal Register chose CMH as the buyer because it was the company's only "stalking-horse" bidder. A February auction was canceled due to a lack of other potential buyers and objections by most other union groups were resolved before the hearing, the company said in court papers.

CMH is an affiliate of funds managed by Alden Global Capital Ltd., which acquired two Journal Register loans totaling $152 million in the previous bankruptcy in 2009. The debt exchange is called a credit bid, in which buyers offer the value of the secured debt they are owed in exchange for assets.

The company's sale agreement includes severance and paid time off for employees who lose their jobs as a result of the deal, the assumption of liabilities totaling $22.8 million and other costs, according to an amended sale agreement filed with the court on March 15. The deal's total value wasn't cited.

The company won court approval last year to borrow as much as $25 million from Wells Fargo & Co. to fund operations while in court protection.

Assets, debt

Journal Register, based in Yardley, Pa., listed assets of $235 million and debt of $268.6 million in its Chapter 11 papers last year. The debt included about $13.2 million on a revolving credit owing to Wells Fargo, according to court papers filed at the time.

In addition to the Michigan properties, the company's newspapers include the Delaware County Times and the Trentonian near Philadelphia, the Daily Freeman in Kingston, N.Y., the Register Citizen in Connecticut and the News-Herald outside of Cleveland.

The publisher previously sought court protection in February 2009, at the time listing debt of as much as $1 billion. Journal Register exited bankruptcy about six months later under the terms of a prenegotiated reorganization plan.

In February, JRC informed all of its employees that they could be terminated by the new owner. Mandatory layoff notices were filed in each of the 10 states with JRC properties.

Journal Register submitted to the Michigan Workforce Development Agency a notice under the federal Worker Adjustment and Retraining Notification Act that its 844 employees in the state could be laid off because of the ownership change.

The WARN Act requires companies with more than 100 employees to file notice with state and local governments at least 60 days before building closures or layoffs that affect more than 50 full-time employees.